Not all existing mortgages are conventional Fannie Mae and Freddie Mac loans. Nor are they FHA or VA loans. Many mortgages that were secured during the housing boom years were called sub-prime loans for well qualified borrowers which were actually cheaper than conforming mortgages. There were Alt-A loans, stated income loans, no doc loans and others that did not meet the conventional guidelines of a mortgage. Many of these borrowers are now unable to refinance due to housing market conditions. There is currently a proposed refinance program that will reach more borrowers including the ones that do not fit into the existing government programs being offered, HARP and FHA Streamline Refinance.

Introduced by U.S. Senators Robert Menendez (D-NJ) and Barbara Boxer (D-CA), Senate Bill 3085 would provide an expansion of the existing HARP program by streamlining the process and making it available to more borrowers. Called the Responsible Homeowner Refinancing Act of 2012, or HARP 3, it will extend the date for the current HARP to loans closed prior to June 1, 2010 (sold to Fannie Mae or Freddie Mac), adding an additional year. Other highlights include: requiring the same underwriting guidelines for servicers and non-servicers which would improve competition among lenders; removing the requirement that borrowers must provide income and employment documentation; eliminating the costs for appraisals, as well as, all upfront fees; and penalizing second lien holders or mortgage insurance companies that prevent borrowers from refinancing.

Many different borrowers would be helped by this latest proposal, even some jumbo mortgage borrowers. Millions of homeowners who have been current on their mortgage payments would be able to take advantage of this and refinance to lower mortgage rates. According to the White House website, borrowers will be eligible as long as no mortgage payments were missed in the last six months and no more than one missed payment occurred in the previous six months. In addition, borrowers must have a FICO score of at least 580, the mortgage must not be worth more than the area median home prices according to FHA-conforming loan limits and the mortgage refinance must be for a single family, owner occupied principal residence. With these new proposed rules, the borrower does not have to be underwater.

This could very well be the most effective mortgage refinance program reaching millions of existing homeowners, if approved. At the current time, although the present programs are helpful, there are too many barriers that are keeping many borrowers out of the loop. Many borrowers are not underwater, yet they are having a difficult time refinancing due to lender guidelines and credit restrictions. If approved, these updates will also be beneficial for communities around the country since borrowers will inevitably put some of the savings back into the economy.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% point origination fee.